Pound collapses as Boris Johnson unveils plan to force the UK out of Europe

Sterling dived as concerns rose that the United Kingdom may be headed out of Europe without a deal in place after Prime Minister Boris Johnson moved to restrict parliamentary time before the October 31 deadline.

Johnson said on Wednesday he would schedule a Queen's Speech for October 14 to launch new legislation. He denied he was seeking to prevent parliament from obstructing his Brexit plans.

But the move cuts the amount of parliamentary time available for MPs to mount an effective opposition to stop the UK leaving without an exit deal.

Commons Speaker John Bercow called it a "constitutional outrage". He added: "It is blindingly obvious that the purpose of prorogation now would be to stop Parliament debating Brexit and performing its duty in shaping a course for the country".

The pound reacted badly to the news, extending its fall to hit $1.2156, a six-day low, down 0.7 per cent on the day.

Against the euro sterling also weakened to 91.265 pence, its lowest in rate in almost a week, trading down by 0.7 per cent at 90.89 pence.

Andy Scott, associate director at independent financial risk advisor JCRA, said: “Sterling suffered a large sell-off this morning as traders suddenly got notice that Boris Johnson will not let Parliament get in the way of a no-deal Brexit.

“Sterling’s recovery from multi-year lows versus the dollar and the euro over the past two weeks has been largely due to hopes that either the EU will agree to replace the Irish backstop with alternative arrangements, or Parliament can block a no-deal.

"Today’s move by Johnson undermines Parliament’s chances and sets the UK on a hard-Brexit course with arguably few prospects of avoiding such an outcome."

Jordan Rochester, a strategist at Nomura said: "For the pound to recover the fall this morning, anti-no deal MPs will have to get their acts together in the first weeks of September."

The latest move from Johnson comes a day after MPs opposed to a no-deal Brexit met to discuss ways they could use parliamentary procedure to force Johnson to seek a delay to Brexit.

Sterling had rallied in recent days on hopes that Britain's opposition parties can stop a no-deal Brexit.

On Tuesday, it hit a one-month high against the dollar and the euro.

Johnson has said the UK is leaving the European Union with or without a deal on October 31, and media have previously reported that he wants to suspend parliament to help force through an exit.